UK NEWS

SLASH INTEREST RATES TO 4%, BANK BOSS IS URGED

ACT NOW: Call to Mervyn King

Monday January 28,2008

By Graham Hiscott Consumer Editor

Comment Speech Bubble Have your say(2)

BANK of England boss Mervyn King faced fresh calls to slash interest rates last night amid growing fears that Britain is heading for a full-blown recession.

Experts believe the cost of borrowing may have to plummet to four per cent to spark a revival in the economy.

It comes as ominous signs emerge about the country’s finances. Figures yesterday showed house prices fell for the fourth month in a row.

Prices have dropped 0.3 per cent this month, with the cost of the average home down to £174,700.

Although values are still higher than a year ago, the annual rate of growth slowed from 3.6 per cent in December to 2.3 per cent – the lowest since June 2006, says the website Hometrack.

Fears of mass redundancies in the financial industry sector also threaten to hasten the slowdown. As many as 20,000 City jobs could be lost because of the global credit crunch, a leading economic forecaster said.

Experian predicts the workforce of the City of London and Canary Wharf will shrink by five per cent this year.

Last Friday top investment bank Goldman Sachs announced it was slashing up to 1,500 jobs.

It means there will be fewer rich employees looking for expensive houses, with a knock-on impact for the rest of the housing market.

Meanwhile figures this week are expected to show most retailers suffered miserable Christmas trading. Most have heavily discounted goods through January to boost consumer confidence.

The gloomy picture will add to mounting pressure on the Bank’s monetary policy committee to cut rates next week. Most economists believe it will announce a quarter point cut but some say a half point drop is becoming likely.

An expert yesterday warned the economy was entering its weakest period for 15 years.

Roger Bootle, adviser to accountants Deloitte, said he expected the economy to grow by two per cent this year and 1.7 per cent in 2009 – the lowest two-year rate since 1992.

He predicted interest rates would be slashed from 5.5 per cent to four per cent within two years to avert a major slowdown.

He said: “The increasing vulnerability of the housing market is at the heart of the downturn.

Admittedly, the UK economy escaped a major economic downturn in 2004/05, when the housing market experienced its first ever ‘soft’ landing. But the ‘big one’ might now finally be upon us.”

CAUSE AND EFFECT

28.01.08, 9:17am

The experts say that the current balls up has been caused by the easy availability of cheap loans allowing people to build up a mountain of debt. Now the same "experts" say that to get out of this mess we need to cut interest rates so people can borrow more money and spend spend spend to boost the economy. The lunatics have taken over the asylum

• Posted by: Col • Report Comment

EXPERTS?

28.01.08, 5:29am

Quote : Experts believe the cost of borrowing may have to plummet to four per cent to spark a revival in the economy.

With all these so called experts in the UK why is the country always in the shite?
Experts are full of crap!

• Posted by: kojak • Report Comment